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The Convio Online Marketing Nonprofit Benchmark Index™ Study

49 pages
















The Convio Online
Marketing Nonprofit
Benchmark Index™
Study
















Published: March 2009


Authors:
Quinn Donovan, Convio Analytics Manager
Vinay Bhagat, Founder and Chief Strategy Officer
Brian Hauf, VP Client Success Services

The Convio Online Marketing Nonprofit Benchmark Index™ Study
Contents

Table of Contents
Introduction ............................................................................................................................................................... 4
Key Findings ............................................................................................................................................................... 5
Aggregate Nonprofit Sector Performance Trends .................................................................................................. 6
Nonprofit Vertical Performance Trends ................................................................................................................ 11
Monthly Website Traffic ......................................................................................................................................... 11
Registration Rate ..................................................................................................................................................... 14
Email File Size ................................................... ...
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            The Convio Online Marketing Nonprofit Benchmark Index™ Study                                                 Published: March 2009    Authors:  Quinn Donovan, Convio Analytics Manager   Vinay Bhagat, Founder and Chief Strategy Officer  Brian Hauf, VP Client Success Services          
The Convio Online Marketing Nonprofit Benchmark Index™ Study Contents  Table of Contents Introduction. .............................................................................................................................................................. 4 Key Findings ............................................................................................................................................................... 5 Aggregate Nonprofit Sector Performance Trends. ................................................................................................. 6 Nonprofit Vertical Performance Trends. ............................................................................................................... 11 Monthly Website Traffic ......................................................................................................................................... 11 Registration Rate ..................................................................................................................................................... 14 Email File Size .......................................................................................................................................................... 16 Online Revenue: Fundraising, Growth, Ecommerce, Average Gifts, and Value of an Email Address ................ 22 Fourth Quarter Fundraising .................................................................................................................................... 27 Email Appeals: Open Rates, Click-Through Rates, and Response Rates ............................................................. 30 Email Newsletters: Open and Click-Through Rates ............................................................................................. 34 Advocacy ................................................................................................................................................................. 36 Summary. ................................................................................................................................................................. 39 Methodology ........................................................................................................................................................... 40 Metrics Summary Tables by Vertical ...................................................................................................................... 45 Discussion of Metrics .............................................................................................................................................. 48 Success Stories ........................................................................................................................................................ 48 Join the Discussion on Connection Café Blog and in the Online Convio Client Community............................. 48 About Convio ......................................................................................................................................................... 49   List of Figures  Figure 1: Vertical Segment Descriptions ............................................................................................................... 42 Figure 2: Major Emailers by Vertical. ..................................................................................................................... 43 Figure 3: Website and Email File Metrics by Vertical ........................................................................................... 45 Figure 4: Online Revenue Metrics by Vertical ...................................................................................................... 46 Figure 5: Email Appeal and Email Newsletter Metrics by Vertical ....................................................................... 47   List of Charts Chart 1: Annual Industry Online Revenue Growth. ................................................................................................6 Chart 2: Fourth Quarter Industry Online Revenue Growth ..................................................................................7 Chart 3: First to Third Quarter Industry Online Revenue Growth. .......................................................................8 Chart 4: Annual Industry Website Traffic Growth..................................................................................................8 Chart 5: Annual Industry Email File Growth ............................................................................................................9 Chart 6: Annual Industry Usable Email File Growth ............................................................................................ 10 Chart 7: Monthly Website Traffic by Vertical. ...................................................................................................... 12 Chart 8: Monthly Website Traffic Growth by Vertical ........................................................................................ 13 Chart 9: Registration Conversion Rates by Vertical. ............................................................................................ 15 Chart 10: Total Email File Size by Vertical ............................................................................................................ 17 Chart 11: Usable Email File Size by Vertical. ......................................................................................................... 18 Chart 12: Percentage of Email File Usable by Vertical ......................................................................................... 19 Chart 13: Usable Email File Yearly Comparison................................................................................................... 20 Chart 14: Annual Email File Year-Over-Year Growth by Vertical ...................................................................... 21 Chart 15: Online Revenue (Fundraising) by Vertical ............................................................................................ 22 Chart 16: Online Revenue Year-Over-Year Growth Rate by Vertical ............................................................... 23 Chart 17: Average Online Gift (Fundraising) by Vertical ..................................................................................... 24  032109  2 
The Convio Online Marketing Nonprofit Benchmark Index™ Study Chart 18: Online Revenue Per Usable Email Address by Vertical. ...................................................................... 25 Chart 19: Ecommerce by Vertical ......................................................................................................................... 26 Chart 20: Fourth Quarter Online Revenue by Vertical ....................................................................................... 27 Chart 21: 2008 Average Gift by Quarter ............................................................................................................. 28 Chart 22: Fourth Quarter Online Revenue Growth by Vertical ......................................................................... 29 Chart 23: Email Appeal Average Open Rate ........................................................................................................ 31 Chart 24: Email Appeal Average Click-Through Rate. ......................................................................................... 32 Chart 25: Email Appeal Average Blended Response Rate ................................................................................... 33 Chart 26: Email Newsletter Average Open Rate. ................................................................................................ 34 Chart 27: Email Newsletter Average Click-Through Rate. .................................................................................. 35 Chart 28: Advocates on Email File ........................................................................................................................ 36 Chart 29: Advocates Who Have Also Donated Online ...................................................................................... 37 Chart 30: Online Donors Who Have Also Advocated Online ........................................................................... 38   032109  3 
The Convio Online Marketing Nonprofit Benchmark Index™ Study Introduction  For the third consecutive year, Convio — the leading provider of on-demand constituent relationship management software solutions for nonprofits — has created The Convio Online Marketing Nonprofit Benchmark IndexStudy to help nonprofit marketers answer the following questions:   What online marketing metrics should I focus on?  How is my organization doing?  What targets should I set for my organization?  The appropriate metrics for evaluating the success of an online marketing program vary depending on the program’s primary objective. What should a nonprofit measure when the objective is to raise money, drive website traffic, build its email file, drive response to an appeal, or prompt some other action? Even when managers know what metrics are important and how to measure them, how do they know if their results are good? The only way to do this objectively is to compare their results against those of their peer group.  By knowing how an organization performs against a benchmark of its peers, it can begin to identify which areas of its online marketing program are performing well or are underperforming. This quantitative approach to measuring success gives organizations a framework to continually refine their tactics, improve the effectiveness of their online initiatives, and allocate resources more efficiently.  This year’s study uses data compiled from nearly 600 nonprofit organizations and aggregates their results into benchmarks that nonprofit organizations can use to compare their results to those of their peer group. When selecting which organizations to benchmark your results against, there are multiple dimensions that should be considered. However, for most organizations, sharing a common mission can provide the most valid comparison. As such, this study provides separate benchmarks for the nonprofit industry as a whole, as well as for 14 nonprofit industry subgroups, or verticals.  Previous Convio benchmark studies have shown that organizations with large email files perform more like other large organizations than organizations of a similar mission but with smaller email files. This is because online programs of this size often correlate to large organizational infrastructure, budgets, staff, and sophisticated offline fundraising programs. For this study, we chose to designate these organizations with more than 250,000 online constituents, or Major Emailers, as their own segment. These organizations are removed from vertical benchmarks to avoid skewing them excessively.  This year’s study also includes the addition of two new verticals for comparison. The first, a Jewish vertical, focuses on organizations that provide human services, aid to Israel, and support for issues of importance to Jewish constituents. The second, called Team Events, focuses on organizations that derive more than 80 percent of their total online fundraising from event-based peer-to-peer fundraising such as walks, runs, or bicycle rides. While the vast majority of the Team Event fundraising organizations are health organizations, we felt that the metrics associated with Team Event fundraising-led organizations were markedly different from other health organizations that do not rely on this strategy.  For additional assistance in understanding how your organization is performing and what strategies and tactics can help improve any areas where your performance is below that of your peer group, please contact your Convio Account Manager or Sales Executive about engaging a Convio Interactive Marketing Consultant or a consulting partner from Convio’s Fusion Partner Program.  032109  4 
The Convio Online Marketing Nonprofit Benchmark Index™ Study Key Findings  The Convio Online Marketing Nonprofit Benchmark Index Study looked at nearly 600 nonprofit organizations’ online marketing results and compiled a series of benchmarks for evaluating fundraising, email, advocacy, and marketing success online. At a macro cross-segment level, this study revealed the following:   Positive year-over-year growth in all of the key areas of online success, including online fundraising, email file growth, and website traffic. This is a noticeable contrast to some reports that indicate offline direct mail-led fundraising growth declined in 2008, especially in the fourth quarter.  The fourth quarter of 2008 was a challenging time for many nonprofit organizations. During this period we saw many donors continued to give, although average gift amounts online declined for many organizations. We also noticed erosion of year-over-year growth for several key online metrics during this period.  With the average gift amount unchanged at many organizations, growth in fundraising was driven by an increase in the number of online gifts received by organizations during the fourth quarter of 2008. This had the effect of driving up total online giving, despite a lower average gift for most organizations.  While year-over-year growth rates remain positive, the rate of growth is beginning to show signs of decline as many of these metrics are now growing at a slower rate than in previous years. This is to be expected with the increased scale of online marketing/fundraising programs. With double-digit growth still present across many key online success metrics, this is not yet an area of concern, but will need to be watched closely in the years ahead.  Compared to small and medium sized organizations, large organizations appear to be less impacted by the economy. Despite having a larger constituent base from which to grow, larger organizations “defied gravity” by outpacing the market from an email file and online revenue growth perspective. This effect was especially prevalent in the Environment & Wildlife and Public Affairs verticals where we saw negative growth for the small and medium sized organizations, but positive growth for larger organizations.  Email open rates remain strong across all organization types. Open rates above 20 percent for both email appeals and email newsletters suggest that nonprofits continue to get their message across successfully, despite increasingly crowded email inboxes.  032109  5 
The Convio Online Marketing Nonprofit Benchmark Index™ Study Aggregate Nonprofit Sector Performance Trends  Introduction Successful organizations have a plan. Formulating a solid plan requires an understanding not only of where your organization is headed, but also of where the entire sector is headed. New to this year’s study is a look at the nonprofit sector from a macro level using a sub-group of over 200 nonprofit organizations that have three years of data as a proxy for the industry.  Sector Online Revenue Trend Some reports indicate that direct mail fundraising declined in 2008. On the other hand, by examining approximately 200 nonprofit organizations' results, we see that online fundraising is currently in a multi-year growth phase. For the period of 2007 to 2008, organizations in this study saw their online revenue increase from $207,286 to $235,334; an increase of 14 percent. With the average online gift of $67.47 — basically unchanged from 2007 levels — online revenue growth in 2008 was driven by a 14 percent increase in the number of gifts received online. It appears that for 2008, nonprofit organizations continued to grow their online programs as more gifts were received online, even though the average online gift was unchanged.  The good news for online fundraising professionals is that online revenue growth in 2008 is not a one year anomaly. As seen in Chart 1, looking at the same organizations over a three-year period, we see that online revenue growth has been positive since 2006. However, as organizations' online programs grow, it is more difficult to maintain double-digit growth rate indefinitely. Chart 1 shows that the rate of growth of 14 percent from 2007 to 2008, while still positive, decelerated from a growth rate of 26 percent from 2006 to 2007.       032109  Chart 1: Annual Industry Online Revenue Growth  6  
The Convio Online Marketing Nonprofit Benchmark Index™ Study Q4 Deep Dive Given the heightened concern about the economy starting in the fourth quarter of 2008, we took a closer look at how the final three months of 2008 compared to that same period in previous years. The good news is that despite many organizations having to cut back on their fundraising and outreach efforts during this time, online fundraising actually experienced a three percent growth (see Chart 2), which was much better than the contraction that many were anticipating.     Chart 2: Fourth Quarter Industry Online Revenue Growth   Chart 3 shows that going into the fourth quarter of 2008, online revenue growth was 18 percent above the previous year. Clearly, three percent growth in the fourth quarter, compared to 18 percent growth for the first nine months of the year, indicates that the economy had a significant impact on online fundraising in the final three months of 2008.      032109  7 
The Convio Online Marketing Nonprofit Benchmark Index™ Study  Chart 3: First to Third Quarter Industry Online Revenue Growth   Website Traffic Trend Nonprofits continue to have success driving visitors to their websites on a monthly basis using relevant content and viable offers. In Chart 4, we see that the number of annual unique website visitors grew from 97,925 in 2007 to 117,955 in 2008, representing 20 percent growth. While still in a very strong multi-year growth phase, the rate of growth in website traffic is down from 27 percent growth in 2006-2007 to 20 percent in 2007-2008; this trend is similar to the one that was observed in online revenue growth.    032109 Chart 4: Annual Industry Website Traffic Growth  8  
The Convio Online Marketing Nonprofit Benchmark Index™ Study Email File Trend In 2008, organizations added 28 percent more new constituents to their email files than in 2007. With a median email file of over 34,736, organizations are having continued success giving their constituents reasons to engage with them online. While email file growth rates remain very robust at 28 percent, they are lower than the 38 percent growth achieved by those same organizations in 2007.  Since most organizations use their website as their primary means of building their email file, there is a strong correlation between website traffic and email file growth. As we saw in Chart 4, the rate of website traffic growth slowed from 27 percent to 20 percent, a net drop of 26 percent. In Chart 5, we see that email file growth slowed from 38 percent to 28 percent, a decline of 26 percent. This decrease suggests that organizations are doing a good job capitalizing upon the growth in website traffic to yield new email addresses, and are becoming less reliant on list uploads, appends, or other “non organic” methods seen in previous studies.                 032109    Chart 5: Annual Industry Email File Growth  9  
The Convio Online Marketing Nonprofit Benchmark Index™ Study While many organizations focus on their total email file size, a more important metric is their usable file — the “usable” portion of an organization’s email file, or the portion that is currently opted-in and able to receive communications from the organization. Usable email files continued to grow strongly in 2008. Chart 6 shows a median of 18,951 usable email addresses on file, an 18 percent increase over 2007. This trend is similar to the total email file growth, which at 28 percent, grew slower than the previous year.        032109  Chart 6: Annual Industry Usable Email File Growth  01  
The Convio Online Marketing Nonprofit Benchmark Index™ Study Nonprofit Vertical Performance Trends  When selecting which organizations to benchmark your results against, there are multiple dimensions that should be considered. We believe that for the majority of organizations, comparing organizations that share a common mission (vertical) — such as all Animal Welfare groups, or all Public Broadcasting Stations — provides the most valid comparison. As such, this study provides separate benchmarks for the industry as a whole, as well as 14 nonprofit industry subgroups, or “verticals”. Now that we have an understanding of how the nonprofit industry is trending at a macro level from online revenue, website traffic, and email file perspective, we need to look at how each vertical is performing.  For each of the metrics in this section, a portion of the 597 study participants may be shown based on their relevance given the time frame indicated, or the metric being discussed. For instance, 389 organizations in this year’s study sent an email newsletter, whereas only 327 sent an online appeal during the year. The “n” value in the title of each chart describes how many organizations are included for that particular metric. For more information, please refer to the Methodology section of this study.   Monthly Website Traffic  For many constituents, your website is their first interaction with your organization. When used effectively, your website can convey the importance of your organization’s mission, help you to register new constituents so you can continue to communicate with them via email and generate desired actions, such as making a donation or signing a petition. Harnessing website traffic is, for most nonprofit organizations, the best tactic for growing their email files. In the seminal research about the online behavior of mid-level and major donors, The Wired Wealthy Study, we learned that 49 percent of online mid-level and major donors will always visit a nonprofit's website before making a first time gift online or offline.  Chart 7 shows the success that organizations are having driving traffic to their websites, as measured by the median number of unique visitors to their sites per month. What makes the visitor “unique” is that they are only counted once within a given time period — in this case a calendar month — regardless of how many times they visit the website.  Not all of the 597 organizations within this study have their entire website hosted by Convio. Results for any organizations whose website is hosted by solutions other than Convio were not available; therefore, those organizations were excluded from this metric. The 206 organizations in this study that constitute this benchmark had an average of 9,830 unique website visitors per month during the 2008 calendar year. Verticals performing better than the benchmark included Animal Welfare, Public Broadcasting Stations, and Visitation, Performing Arts & Libraries, whose missions have broad appeal.  The Major Emailers, or organizations with email files greater than 250,000, show a median monthly website traffic of 43,629, suggesting a strong correlation between website traffic and email file size.    032109  11 
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